The two lenders' house price indices often differ due to variations in the methodology used to collect the data and a difference in the "average house" on which the data is based.

Martin Ellis, Halifax's housing economist, said: "Whilst there was a modest fall overall in prices during 2011 with an annual decline of 1.3% in December, house prices held up well last year in the face of the difficult and deteriorating economic climate and substantial pressure on households' finances.

"If the UK can avoid recession we expect broad stability in house prices in 2012. There is, however, considerable uncertainty regarding the prospects for the UK economy which will to a large extent depend on how events in the eurozone unfold."

He added: "The extent to which households choose to reduce their debts will also affect growth. As a result, the outlook for house prices is also uncertain."

Market conditions, as measured by the ratio of house sales to the stock of unsold properties, remained broadly unchanged in 2011, a factor that helped to explain the modest movement in prices, the Halifax said.

However, the number of completed house sales rose to its highest levels in October and November 2011, according to the lender, with the number of sales in November the highest since December 2009.

Howard Archer, chief UK and European economist of financial analysts IHS Global Insight, said the Halifax data reinforced his expectation that prices are headed downwards over the coming months, and are likely to fall by about 5% in 2012.

"The squeeze on consumers' purchasing power should ease as 2012 progresses as inflation falls back markedly, and this may help house prices to stabilize in the latter months of 2012 along with ongoing very low interest rates," he said.

"However, unemployment is likely to rise appreciably further and wage growth looks set to remain muted so the overall environment will still be very tough for households."